The price of bacon is rising faster than tuition at Harvard, highlighting yet another way the pandemic has upended traditional metrics of inflation.
The growth in the cost of college had outpaced inflation for decades until COVID. Tuition and fees rose 0.6 percent on average annually over the last 12 months compared with a 3.2 percent increase in U.S. prices overall, according to the Bureau of Labor Statistics. It’s the largest gap between the two since the late 1970s and early 80s when annual inflation peaked around 15 percent.
Broader inflation is rising due to supply-chain issues and labor shortages that have caused prices to spike in everything from food to furniture. That’s been coupled with soaring consumer demand during the pandemic, fueled by unprecedented fiscal and monetary stimulus.
Colleges, meanwhile, have seen fewer enrollments in the pandemic, thanks in large part to remote learning and difficulty for international students to get to the U.S.
The wide gap could also be explained in part by the time of year when universities typically set their tuition rates, likely around May or June, said Ron Ehrenberg, an economist at Cornell University. That was before the delta variant spread and inflation surged.
For the 2020-21 school year, the average sticker price for tuition and fees for full-time undergrads in a four-year program was $37,650 at private universities and $27,020 for out-of-state students at public schools, according to the College Board. Those represent annual increases of 2.1 percent and 0.9 percent respectively before adjusting for inflation, and don’t include other costs such as room and board, books and laundry.
The Bureau of Labor Statistics began accounting for financial aid in 2003, which contributed to some of the downtrend in year-over-year growth rates as student aid has expanded. Looking forward, strong returns on large endowments could pressure colleges to spend more on financial assistance and hold down growth in tuition costs further.
Story by Janet Lorin and Jordan Yadoo.